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Spring brings fashion relief for retailers

Carolyn Cummins

Retail landlords and tenants had to battle through the warmer start to winter, but spring will bring some relief, according to the latest sales data.

Sentiment is starting to improve, albeit slowly, except for department store chains. With spring racing carnivals not far away, shoppers are already picking out outfits and accessories, which is welcome news for retailers.

In the latest figures, Australian retail sales grew 4.9 per cent in June, compared with the same month a year ago. Sales trends have stabilised following the budget-induced drop in sentiment.

Retailers are ready to start putting spring and summer fashions into the shops and consigning the older winter clothes to the discount bins.

The ABS data reveals growth came from hardware stores, as people renovate their houses to sell or work on new homes, and cafes, which is putting continued pressure on the apparel retailers.

Recent data from Jones Lang LaSalle for the June quarter showed retail vacancy rates decreased in the first six months of the year, as retail market conditions began to improve.

JLL’s Australian head of retail, property & asset management, Tony Doherty, said the average retail vacancy rate for Australia fell to 3.6 per cent in June from 3.8 per cent in December last year, on average across all retail formats.

‘‘The city and sub-regional malls [over 20,000 square metres in size] were the main drivers, with the sub-regional vacancy rate falling from 3 per cent to 2.6 per cent and [the] CBD vacancy rate falling from 6.6 per cent to 6.2 per cent,’’ Mr Doherty said.

Mr Doherty said the figures were encouraging, particularly for Brisbane and Perth. As of December last year, both markets had the highest rate of retail vacancy in the country, but conditions were improving as high CBD vacancy rates began to ease. This modest improvement in the first half of the year now puts them ahead of Adelaide.

‘‘For the 12 months to June 2014, retail spending rose 4.6 per cent. This is an improvement on the 2013 financial year result of 2.7 per cent growth,’’ he said.

‘‘Retail sales conditions remain below trend and our view is that sales will become tougher later in calendar 2014. The most recent upswing in retail was closely tied to house price growth.

‘‘As we move through October 2014 onwards, we are lapping 12 months of solid house price growth. We expect retail spending to remain below 5 per cent in 2015 financial year estimates and prefer retailers with store rollout or margin expansion opportunities.’’